Revision as of 15:24, April 11, 2011 (edit)
Ilovepitchbooks - Sr. Director (Talk | contribs)
(Current Restructing)
← Previous diff
Revision as of 15:24, April 11, 2011 (edit) (undo)
Ilovepitchbooks - Sr. Director (Talk | contribs)
(Current Restructing)
Next diff →
Line 6: Line 6:
===Current Restructing=== ===Current Restructing===
 +
 +[[Image:capstrucnwy.png|thumb|200px|left|unadjusted capital structure]]
 +
 +[[Image:capstrucnwyadjusted.png|thumb|200px|right|adjusted capital structure]]
 +
On January 8th, 2009, NWY announced that they will be undergoing a multi-year restructuring and cost reduction program. It is expected to generate $175+ million in pre-tax savings over a five-year period once completed. According to NWY’s Q4 2010 10-Q, this program will reduce cost and eliminate underperforming assets while enhancing efficiency and profitability. On January 8th, 2009, NWY announced that they will be undergoing a multi-year restructuring and cost reduction program. It is expected to generate $175+ million in pre-tax savings over a five-year period once completed. According to NWY’s Q4 2010 10-Q, this program will reduce cost and eliminate underperforming assets while enhancing efficiency and profitability.
The key components of the restructuring and cost reduction program include <ref> NWY 10K </ref>: The key components of the restructuring and cost reduction program include <ref> NWY 10K </ref>:
Line 14: Line 19:
* A broad-based cost reduction effort across all aspects of the Company's business * A broad-based cost reduction effort across all aspects of the Company's business
- 
-[[Image:capstrucnwy.png|thumb|200px|left|unadjusted capital structure]] 
- 
-[[Image:capstrucnwyadjusted.png|thumb|200px|right|adjusted capital structure]] 
===Current Capital Structure=== ===Current Capital Structure===

Revision as of 15:24, April 11, 2011

NWY Summary

Business Overview

New York & Company, founded in 1918, is a leading specialty retailer of fashion-oriented, moderately-priced women's apparel. It designs and sources its proprietary branded New York & Company merchandise sold exclusively through its national network of retail stores and E-commerce store at www.nyandcompany.com.The target customers for its merchandise are fashion-conscious, value-sensitive women between the ages of 25 and 45. The Company's merchandise reflects current fashions and fulfills a broad spectrum of its customers' lifestyle and wardrobe requirements. As of October 30, 2010, the Company operated 579 stores in 43 states with 3.2+ million selling square feet in 43 states.

The Company markets its stores as a source of fashion, quality and value. It does so by providing customers with an appealing merchandise assortment at attractive prices, generally below those of department stores and other specialty retailers. NWY offers products consisting of casual and wear-to-work apparel and accessories. Examples of such products include pants, jackets, knit tops, blouses, sweaters, denim, t-shirts, active wear, handbags and jewelry. The Company's stores are typically concentrated in large population centers of the United States and are located in shopping malls, lifestyle centers and off-mall locations, including urban street locations.

Current Restructing

Error creating thumbnail
unadjusted capital structure
Error creating thumbnail
adjusted capital structure

On January 8th, 2009, NWY announced that they will be undergoing a multi-year restructuring and cost reduction program. It is expected to generate $175+ million in pre-tax savings over a five-year period once completed. According to NWY’s Q4 2010 10-Q, this program will reduce cost and eliminate underperforming assets while enhancing efficiency and profitability. The key components of the restructuring and cost reduction program include [1]:

  • Strategic staff downsizing initiated in January 2009, which resulted in a permanent reduction of approximately 12% of the Company's field management at that time and an approximate 10% reduction of corporate office professionals
  • The optimization of the Company's store portfolio, including the closure of 40 to 50 under performing stores over a five-year period
  • A broad-based cost reduction effort across all aspects of the Company's business

Current Capital Structure

New York and Company has a very conservative capital structure at first glance. It has mostly equity in its capital structure at 97.72% while debt consists of the remaining 2.28%. NWY has no preferred stock.

However, NWY also has a lot of operating leases which understate the amount of liabilities it reports. If the amount of its operating leases is multiplied by 8 (to estimated the amount of debt NWY should be reporting had it capitalized its lease agreements), NWY can be seen to have somewhat of an aggressive capital structure.

Its "new" or rather adjusted capital structure consists of 81.76% equity and 18.24% debt. This is a lot more aggressive and results in a debt/equity ratio of about 22 compared to its unadjusted ratio of 2.

Business Segments and Product Portfolio

Retail Stores

Error creating thumbnail
The chart above shows what states New York & Company is most heavily concentrated in

New York and Company’s retail segment targets customers for its merchandise are fashion-conscious, value-sensitive women between the ages of 25 and 45. Its stores are source of fashion, quality and value. It does so by providing customers with an appealing merchandise assortment at attractive prices, generally below those of department stores and other specialty retailers [2].

As of October 31, 2010 NWY owns and operates 552 New York and Company brand stores. NWY stores are mainly concentrated in large suburban areas where high traffic shopping malls and lifestyle centers are present. New York and Company also has 24 outlet stores. Having factory outlet stores represents NWY trying to control its inventory levels as any excess inventory can be sent to its outlets. The average NWY store is 5,500 square feet in size and for FY 2010, New York and Company’s retail stores occupied a total 3.2 million square feet [3].

The states with 10 or more New York and Company stores (which account for 453 of their 552 stores) are primarily concentrated in New York (54), California (49), Texas (49), Florida (34), and Pennsylvania (33). All five of these states have upwards of 30 stores present. In fact, roughly 40% of NWY’s stores are located in these 5 states. California and Texas are the largest states in terms of population so it makes sense for NWY to be heavily concentrated in these markets (both states have 49 stores). New York and Company is also highly concentrated in New York because of the population densities of NYC. ‎

Forbes Magazine ranked Houston and Dallas as the number one and two shopping cities in the U.S. in a 2010 report, further providing a reasonable explanation for Express's heavy presence in Texas. In the past ten years, Texas has experienced a 21% population growth according to U.S. Census data. [4]However, Express has not been the only company to take advantage of this population growth. For example, GAP operates 48 stores in and around the Houston/Dallas area. Other competitors are also expected to expand into Texas as its target population is expected to grow (fashion-conscious, value-sensitive women between the ages of 25 and 45).

Error creating thumbnail
A typical New York & Company Retail Store

Product Portfolio

The Company's merchandise reflects current fashions and fulfills a broad spectrum of its customers' lifestyle and wardrobe requirements. The Company markets its stores as a source of fashion, quality and value. It does so by providing customers with an appealing merchandise assortment at attractive prices, generally below those of department stores and other specialty retailers. NWY offers products consisting of casual and wear-to-work apparel and accessories. Examples of such products include pants, jackets, knit tops, blouses, sweaters, denim, t-shirts, active wear, handbags and jewelry.

Error creating thumbnail
A NWY advertisement which shows typical merchandise sold

Human Resources

Corporate Governance

HA has several key persons as part of their corporate governance. Below are the names and brief biographies of these key persons.

Greg Scott: He is the President, Chief Executive Officer, and Director of NWY.He has been President since June 01, 2010 and was appointed CEO and a Director in February 2011. Mr. Scott has 20+ years of retail industry experience. Most recently, he served as the CEO of Bebe Stores from February 2004 to January 2009 and also served as a member of their board of directors from August 2004 to January 2004. From May 2004 to January 2009, Mr. Scott served as President of Arden B, a division of Wet Seal. Mr. Scott has also held senior level merchandising positions at Ann Taylor Stores and Henri Bendel, a division of The Limited. Mr. Scott began his retail career in the executive training program at Macy’s West, a division of Federated Department Stores, Inc., where he held several merchandising positions.Cite error 3; Invalid <ref> tag; invalid names, e.g. too many

Sheamus Toal: He became the Executive Vice President and Chief Financial Officer of NWY in October 2008. Mr. Toal previously served as Executive Vice President and Chief Accounting Officer of the NWY. Prior to his employment with the Company, Mr. Toal was Vice President and Controller of Footstar, Inc. (a specialty retailer) from 2002 to 2004 and was its Controller from 2001 to 2002. Prior to that, Mr. Toal served in a variety of senior financial management positions with Standard Motor Products, Inc. from 1997 to 2001. Mr. Toal began his career with KPMG LLP where he served in various roles, including a management level position within KPMG's Manufacturing, Retail and Distribution Group. Mr. Toal holds a B.S. in Accounting from St. John's University. Mr. Toal is a Certified Public Accountant in the state of New York..Cite error 3; Invalid <ref> tag; invalid names, e.g. too many

Kevin Finnegan: was named Executive Vice President of Global Sales in April 2009, after holding the position of Executive Vice President, National Sales & Global Business Leader since June 2008. Mr. Finnegan joined New York & Company, Inc. in 2001 as Executive Vice President, National Sales Leader. Prior to that, Mr. Finnegan was employed with the Gap, Inc. for 10 years and also worked at Saks, Inc. Mr. Finnegan is a graduate of Fordham University. < NY&C Officers and Directors/>

Michele Parsons: was named Executive Vice President, Merchandising in January 2011. Ms. Parsons was hired from Coach, where she was Vice President of Merchandising Retail in North America (2007 - 2010). Prior to Coach, Ms. Parsons was President and Chief Merchandising Officer of Liz Claiborne Apparel. She also held Senior Merchandising roles with Tommy Hilfiger and J. Crew Group. She has a proven track record of building brands through new and innovative Merchandising Strategies. Ms. Parsons holds a B.A. from Smith College. < NY&C Officers and Directors/>

Sandra Viviano: was named Executive Vice President of Human Resources in 2003. Previously, Ms. Viviano was the Director of Human Resources for Victoria's Secret Direct and spent 10 years in human resources and merchandising positions with Victoria's Secret Direct. She has more than 25 years of specialty retailing experience and holds a B.A. from the University of Massachusetts. < NY&C Officers and Directors/>

Shown below is a table of key stats for the NWY management team:

Name Title Compensation Previous Employers Education Age
Mr. Gregory Scott CEO (since 2011) NA CEO, Bebe Stores (2009); President, Arden B. (2004) NA 478
Mr. Sheamus Toal CFO (since 2005) $855.00K EVA and CAO of NWY (2005) B.S. from St. John's University 42
Mr. Kevin Finnegan EVP of Global Sales (since 2009) $628.00K Executive Vice President, National Sales Leader (2001) B.A. from Fordham University 58
Ms. Michele Parsons EVP Sales & Marketing (since 2011) NA VP of Merchandising Retail in North America at Coach (2007) B.A. from Smith College 46
Ms. Sandra Viviano EVP Human Resources (since 2003) $425.00k Director of Human Resources for Victoria's Secret Direct (1993) B.A. from the University of Massachusetts. 55

[5][6]

Sales Associate Compensation

Hourly sales associate wages for New York and Company on average are around $8.09/hour. Out of their direct competitors, they have the second lowest hourly pay rate for sales associates.

Error creating thumbnail
Compares New York & Company's average sales associate pay with its competitors


These numbers suggest two things: less wage expense and a potentially lower supply in the labor market for New York and Company. Addressing the first suggestion, since New York and Company pays their sales associates less than their competitors, NWY will have a lower wage expense. The second suggestion looks at the fact that since NWY pays their sales associates less, not as many people will want to work there. More qualified sales associates will look at other employers such as AnnTaylor and Talbots.

Macroeconomic Info

GDP Growth

Real gross domestic product increased at an annual rate of 3.1% in the fourth quarter of 2010. The increase in real GDP in the fourth quarter primarily reflected positive contributions from personal consumption expenditures. Imports, which are a subtraction in the calculation of GDP, decreased. Real personal consumption expenditures increased 4.0 percent in the fourth quarter, compared with an increase of 2.4% in the third. Durable goods increased 21.1 percent, nondurable goods increased 4.1 percent and services increased 1.5%.

Real GDP increased 2.9 percent in 2010 (that is, from the 2009 annual level to the 2010 annual level), in contrast to a decrease of 2.6 percent in 2009. The price index for gross domestic purchases increased 1.3 percent in 2010, in contrast to a decrease of 0.2 percent in 2009.

Going forward, real GDP is expected to increase at 3.2% [7]

Consumer Discretionary Spending

Self-reported daily consumer spending in stores, restaurants, gas stations, and online averaged $64 per day in March 2011. This compares to $58 in January 2011 and $61 in February 2011; however, this is essentially the same as the $63 of March 2010.

http://www.gallup.com/poll/146963/Consumer-Spending-Slightly-March.aspx

Spending among Americans making $90,000+ annually averaged $108 per day in March. This is down from $117 in February 2011 but up slightly from January 2011 where spending averaged around $102. This number is higher than a year ago when spending averaged $99 in March 2010. The new normal range seems to be between $98 to $123 for these Americans [8]

Spending among Americans who earn less than $90,000 annually averaged $57 per day during March. This number is up from $50 in January 2011 and $52 in February 2011. Spending in this group remains around the same as the $58 of March 2010.

Competitors

New York and Company's competitors include AnnTaylor, Talbots, Christopher and Banks, Express, and Gap. Brief descriptions of each respective companies are below.

AnnTaylor: It is a specialty retailer of women’s apparel, shoes and accessories sold under the Ann Taylor and LOFT brands. Its Ann Taylor and LOFT stores offer a range of business professional and casual separates, dresses, tops, weekend wear, shoes and accessories. Ann Taylor offers professional attire, and LOFT offers casual wear. As of January 30, 2010, it operated 907 retail stores in 46 states, the D.C. and Puerto Rico. Of these stores, 291 were Ann Taylor stores, 506 were LOFT stores, 92 were Ann Taylor Factory stores and 18 were LOFT Outlet stores.

Talbots: It is a specialty retailer and direct marketer of women’s apparel, accessories and shoes. Talbots operate stores in the United States and Canada in addition. The store offers a collection of classic sportswear, casual wear, dresses, coats, sweaters, accessories and shoes. Products sold consist of Talbots own branded merchandise. Misses, petites, woman and woman petite sizes are sold. Talbots operated its business in two segments: Retail Stores and Direct Marketing.

Christopher and Banks: It is a retailer of women’s apparel which sells knit tops, woven tops, jackets, sweaters, skirts, denim bottoms and bottoms of other fabrications. As of May 3, 2010, the Company operated 797 stores in 46 states, including 533 Christopher & Banks stores, 262 C.J. Banks stores, and two dual-concept stores. TIn addition, approximately 300 of its Christopher & Banks stores and also began offering jewelry in a select number of stores in fiscal 2010.

Express: It is a specialty retail apparel brand in the United States which targets a demographic of women and men between 20 and 30 years old. It offers its customers an assortment of fashionable apparel and accessories. Products offered are suitable for work, casual and going-out occasions. As of January 30, 2010, Express operated 573 stores in 47 states throughout the United States, including 525 dual-gender stores, 29 women’s stores and 19 men’s stores.

Gap: It is a global specialty retailer offering clothing, accessories, and personal care products for men, women, children, and babies under the Gap, Old Navy, Banana Republic, Piperlime, and Athleta brands. Gap operates stores in the United States, Canada, the United Kingdom, France, Ireland, and Japan. It also has franchise agreements with unaffiliated franchisees to operate Gap and Banana Republic stores in many other countries worldwide. As of January 30, 2010, it operated a total of 3,095 store locations.

NWY 7 Year Historical Financial Ratios

Profitability Ratios

Error creating thumbnail

Liquidity Ratios

Error creating thumbnail

Debt Management

Error creating thumbnail

Asset Management

Error creating thumbnail

Per Share

Error creating thumbnail

Porter’s 5 forces

Threat of entry of new competitors

Over the past 10/15+ years, there have been a decreasing number of independent retailers. In other words, more stores are becoming chain stores and are either owned by large corporations or franchised. The threat to new competitors is therefore small as New York and Company has significant competitive advantages over new competitors entering the market. Such advantages include favorable supply contracts, successful recognition of synergies resulting from a vertical structure. If a new competitor were to enter, they would not be successful in competing against New York and Company.

Intensity of competitive rivalries

There is very intense competition within the retail industry. The retail market does not grow much on a year to year basis which results in firms jockeying for market share amongst each other. Firms in the retail space (New York and Company included) often try and undercut each other with price wars through sales and promotions.

Substitutes

New York and Company offers a wide range of products and is not specialized in a particular product. For this reason, it is easier to find substitutes since there is not just one product which can be used as a substitute. Consequently, retail companies offering products that are unique have a huge competitive advantage. New York and Company offers a unique style in a price range which some of its competitors gloss over. The risk of substitutes although somewhat large on an absolute basis is not big on a relative basis.

Bargaining power of customers

Individual customers have almost no bargaining power in the retail industry as a customer cannot try and negotiate a price when checking out. Consumers as a whole have some bargaining power if they all demand high quality products which forces NWY to provide such a product. Consumers can also compare prices at other stores which forces New York and Company to sell its products at a fair price.

Bargaining power of suppliers

New York and Company has strict control over its suppliers which gives suppliers very little bargaining power. It maintains high standards for quality and if suppliers don't meet these standards, they can be dropped by NWY.

Marketing Strategy

Price

Place

Promotion

Product

Supply Chain

SWOT

Strengths

Weaknesses

Opportunity

Threats

Financial and operating metrics[9]

General Information

Error creating thumbnail

Financial Ratios

Error creating thumbnail

Growth Rates

Error creating thumbnail

Profitability Ratios

Error creating thumbnail

Valuation Ratios

Error creating thumbnail

Management Effectiveness Ratios

Error creating thumbnail

Operating Metrics

Error creating thumbnail

Public Comparables

Error creating thumbnail

References

  1. NWY 10K
  2. NWY 10K
  3. NWY 10K
  4. http://2010.census.gov/2010census/data/
  5. [ http://www.reuters.com/finance/stocks/companyOfficers?symbol=NWY.N New York and Company’s (NWY) People | Reuters.com]
  6. [ http://finance.yahoo.com/q/pr?s=NWY+Profile NWY Profile | New York & Company Inc. Stock - Yahoo! Finance]
  7. http://www.bea.gov/newsreleases/national/gdp/2011/pdf/gdp4q10_3rd.pdf
  8. http://www.gallup.com/poll/146963/Consumer-Spending-Slightly-March.aspx
  9. Bloomberg Professional Service
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki